Democracy Lab

The Little Economy That Could

If you're looking for an unlikely economic success story, you can hardly do better than Mauritius.

All right, confess: If you've heard of Mauritius at all, it's probably because you know it as the former home of the dodo bird. But there are better reasons to look closely at this small island nation in the Indian Ocean, some 600 miles southeast of Madagascar. For in 2011, Mauritius was (again) ranked number one on the Ibrahim Index of governance among African countries. And by no coincidence, it remains one of the top economic performers in the region: Measured in terms of purchasing power, income per person exceeds $15,000 -- more than Turkey or Brazil.

How did Mauritius manage to grab the brass ring, while so many others in the region have failed? In my own research, I have not discovered a single unique ingredient. But there are some serious lessons here on what can propel economic development.

Hardly anybody forecast a happy economic future for Mauritius before it was granted independence from Britain in 1968. To the contrary: the British economist James Meade (who would go on to win a Nobel Prize) concluded that "the outlook for peaceful development is poor" because of its high population density, reliance on a single crop (sugar cane), and ethnic conflict. He might have added that the island was far from markets for its exports, and a daunting plane journey for European tourists in search of sunshine.

Whatever the reasons for Mauritius' economic success (we'll get back to that), it came at a steady pace, and in ways that spread the wealth. Between 1970 and 2010, the GDP grew at an average annual rate of 5.4 percent, compared with the African average of about 1 percent.

Now, a few small, oil-saturated African countries - think Equatorial Guinea - have grown faster and have higher average incomes. But Equatorial Guinea is a kleptocratic nightmare in which only the guys with fancy uniforms and mirrored sunglasses enjoy high living standards. Mauritius, by contrast, ranks second in Africa (after the Seychelles) on the UN's Human Development Index. And the ranking is reflected in common-sense measures of living standards ranging from life expectancy (74 years) to the portion of the population with easy access to safe drinking water (99 percent).

Mauritius' commitment to open trade and the rule of law (reflected in its ranking on the aforementioned Ibrahim Governance Index as well as the less subjective Index of African Governance calculated at Harvard) do correlate well with growth. But what made Mauritius choose the virtuous path?

Mauritius' human history certainly didn't start promisingly. The original Dutch occupiers stripped the island of its valuable ebony trees in the early 17th century (and killed off the dodo). The French, who were next in line, imported African slaves to grow sugar cane. But with British rule (beginning in 1814), the island began to enjoy what might be characterized as "good globalization." Slavery was abolished, and the sugar plantations learned to make do with indentured servants; some 500,000 were imported from India. And across the next century the British gradually extended political rights to all literate adults, even as sugar production rose steadily.

Not a bad legacy, as African colonial histories go. But underlying the economic success of Mauritius since independence are two subsequent accomplishments. First, unlike any other African country, the country rapidly developed a manufacturing sector (specializing in textiles and clothing). Second, Mauritius has successfully navigated the vagaries of the global economy, on which it is so dependent. It managed to contain the damage from the oil price shocks of the 1970s, and it took in stride the successive losses of preferred access to rich-country markets for sugar and apparel.

The adjustments didn't demand novel policies. Mauritius focused on export growth, maintained a business-friendly climate, pursued effective diplomacy to sustain access to critical global markets, took care to prevent its currency from becoming overvalued, and spent enough on education to create a productive labor force. But it is not enough to listen to the advice of the World Bank and crew. If the policies don't mesh with local politics and institutions, they are unlikely to take root. And here, one can see a powerful synergy between democracy and economic growth.

Unlike most newly independent African countries, Mauritius created political institutions that gave a voice to both the rural poor and to ethnic minorities. Also important, Mauritius (like Costa Rica, another big winner in another region full of losers) chose not to establish a standing army. This likely saved it from military coups - and it certainly saved it a lot of money, which was spent on education and infrastructure.

I'm still begging the question. Good institutions led to prosperity. But why did Mauritius, in contrast to so many other post-colonial nations, end up with good institutions? The best answers include historical accident and leadership.

Descendents of the French émigrés who developed the sugar plantations, along with the Creoles whose ancestors had worked the plantations as slaves, initially opposed independence because they feared domination by the majority ethnic Hindus. But they eventually agreed to cede political power in return for guarantees that their property would not be expropriated. Meanwhile the first prime minister, Sir Seewoosagur Ramgoolam,  was able to persuade his constituents to abandon efforts to nationalize the sugar plantations in return for this acknowledgment of their majority political status. (His son, Navin Chandra Ramgoolam, is  the current prime minister; it's his supporters who are shown in the photo at the top of this story, celebrating his victory in the last general election two years ago.)

Some credit also goes to the outgoing colonial administrators -- and the reality that Britain really didn't have a dog in this fight. Very few British settlers arrived to displace the French planters when France lost the island in the Napoleonic Wars. Thus, in contrast to, say, Kenya, the British felt little obligation to protect stranded colonists. Accordingly, they had some credibility as the honest broker between ethnic groups. And they set the precedent that governments must be party coalitions -- one that has held to this day.

Even though Mauritius had ceased to be the crossroads of the Indian Ocean when the Suez Canal opened in 1869, it has retained a cosmopolitan mindset - one of several respects in which it resembles entrepot city-states such as Singapore, Hong Kong and Dubai. This cosmopolitanism came in handy in the process of economic development. Ethnic links to China and India led directly to the rise of the textile and apparel sector and to a financial center, respectively.

When outside shocks hit - the oil price increases, loss of trade preferences and subsequent competition from China - Mauritius was able to meet the challenges with policies that allowed the economy to diversify and thrive. And strikingly, the necessary policy responses were implemented over successive administrations, even as the government was engulfed in furious personal and factional politics.

Mauritius is unique in many ways. But this odd little country does offer three lessons in what would sustain growth in other African countries -- if not much insight into how to get from here to there. First, trade is the key to growth. Openness forces economic interests to compete in global markets and deters what economists call "rent-seeking" -- that is, creating pockets of economic privilege and hanging on to them. Second, the malign economic consequences of deep ethnic divisions can be moderated by a political structure that is truly inclusive and prevents winner-take-all outcomes. Third, even in relatively undeveloped countries, democracies can manage painful economic reforms because a sense of inclusiveness makes it easier to impose collective sacrifice.

Still, one is tempted to search for the X-factor that gave Mauritius an economic edge. Could it be the cultural values of the majority Indians? Probably not. For one thing, while Mauritius was industrializing, India itself was crawling along at what is derogatorily referred to as the "Hindu rate of growth." Meanwhile, a handful of African countries like Cape Verde have done well with no Indians.

My own candidate for the X-factor is the simple fact that all Mauriciens are descendents of people who came from somewhere else relatively recently. When migrants are successful, perhaps because they are self-selected for initiative, the natives are inclined to resent their success. But just three centuries ago, Mauritius was uninhabited. (The same, by the way, is true of the Seychelles and Cape Verde, which also top the African governance listings.) Consider, too, that in a land in which no one is truly a native, no one can claim the privileges of incumbency that are potent obstacles to compromise and change. The important thing is for everyone to feel included.

The pattern shows up in other relevant comparisons of island pairs: Mauritius versus Fiji, Singapore versus Sri Lanka. In each case, the island where all groups are immigrants has been much more successful than the island where ethnic strife has its roots in competition between natives and newcomers. Economies that are most inclined to welcome high-achieving immigrants, it seems, start with a big advantage.



Finish Him

Without international intervention, there's a good chance that Syria's dictator, Bashar al-Assad, could still rule for years.

As world leaders huddle at the United Nations to debate whether to demand Bashar al-Assad's ouster, the smart money is already betting that his time is short. The president of Syria is a "dead man walking," according to one U.S. diplomat, a view shared by Israel's military and predicted by a surveyed group of foreign policy experts. Reports of Assad's death, however, appear greatly exaggerated. The Syrian president has survived almost a year of demonstrations and growing violence, and if not pushed by outside actors he may yet cling to power.

It's easy to see why many think Assad's time might be up. Despite the deaths of over 5,000 protesters and the arrests of thousands more, Syrians have bravely defied the regime, which seems unable to intimidate them into submission. As the protesters have stood strong, Assad's international support has plummeted. Although the world initially did little while Syria gunned down its own people, President Barack Obama declared in August, "The time has come for President Assad to step aside." The European Union joined the United States and imposed comprehensive sanctions against the Syrian regime, including over its oil sales. Meanwhile, the Arab League has repeatedly called for a ceasefire and tried to broker a deal for Assad to hand over power, and some Arab leaders -- like Jordan's King Abdullah II -- have taken the unprecedented step of demanding that a fellow head of state must go. Assad scorns these calls for regime change, but the collapse of trade and investment and massive capital flight are souring many Syrians on the government, and the cash-strapped regime will soon find it harder to pay its security services. Rather than kill their own people, thousands of soldiers have defected from the Syrian army. The pace is escalating, and many more are confined to barracks because the regime doesn't trust them. The Free Syrian Army, apparently composed largely of defectors, has gotten stronger and is operating freely in more of the country.

Each blow has hit the regime hard, but Assad has neither bent nor broken -- and he still has a number of serious assets on his side of the equation.

Look first to the loyalty of the military and security services. The opposition army is getting stronger, but it lacks tanks and other heavy weapons and can't hold its own in an open battle. Without mass defections, the regime is still stronger than the opposition. The officer corps in particular is still loyal, and Assad's relatives hold key positions. The overwhelming majority of the officers come from the president's minority Alawite community, and most Alawite families have at least one member in the security service. And the Alawites -- a religious minority, often scorned by mainstream Sunni Muslims for their supposedly deviant religious practices -- have a visceral reason to resist regime change.

Although only a tenth or so of Syria's population is Alawite, this community is a strong base for the regime: It is armed, mobilized, and fearful that the fall of Assad might mean a brutal death, not just a loss of perks. The regime has mobilized Alawite militias along with military forces, using them as thugs and snipers against their Sunni fellow citizens. As the violence escalates, sectarian killing increases too.

Sunni Arabs dominate the opposition, but Assad has long tried to co-opt other minority groups, such as Christians, Druze, and Kurds -- as well as leading Sunni families -- in order to prevent a united front against the regime. None of these are as loyal as the Alawites, and none has as much to lose -- but that doesn't mean they will go over to the opposition. Minorities look fearfully at Iraq, in particular, and worry that the collapse of the regime and civil war will lead to massacres.

Sanctions are dealing blows to the regime's popularity, but when the pie shrinks access to the government becomes even more important. Those with guns eat first; the opposition eats last. Saddam Hussein's Iraq endured crippling sanctions for over a decade: It found work-arounds and used the scarce revenue to reward supporters while denying aid to enemies. And the humanitarian toll was a particularly effective public relations tool to discredit those who would isolate it internationally. Remember, it took a foreign invasion to topple that dictator.

Nor is Assad standing alone. Iran looks to be doubling down on Syria, its only Arab ally. Tehran, though it is under pressure itself, can give the regime an economic lifeline and enough bullets and shells to keep shooting down protesters -- resources that can make all the difference. Next door, Assad's and Iran's partner Hezbollah offers the Syrian regime another ally and an economic lifeline for smuggling through Lebanon. Iraq's regime, which may be eager to do Tehran a favor, may also turn a blind eye to smugglers bringing goods and weapons into Syria from Iraqi territory. And then there's Russia -- an arms provider and the veto-wielding immovable obstacle at the United Nations, blocking international efforts to isolate the regime.

Perhaps the biggest hope for Assad is the disorganization of the opposition itself. No charismatic leader unites the opposition. Syria has strong local and regional identities, and the opposition Syrian National Council's factionalization reflects this on-the-ground reality. How many Syrians the SNC speaks for is an open question, and critics claim it is dominated by Islamists and does not speak for many Syrians. In contrast to the Libyan rebels, the SNC operates largely in exile, because it doesn't control a part of Syria from where it can base itself without risk. Not surprisingly, there are sharp divisions between those inside the country bearing the brunt of the regime's brutality and those who live safely outside Syria and represent the country abroad. So far at least, the rebels enjoy some sympathy from international governments but at most limited, active support from major powers -- which are also quick to emphasize that international military intervention is not on the table.

In short, the Syrian dictator is not strong enough to subdue the opposition, but they are not strong enough to oust him -- a scenario for continued civil war.

So, if Assad is to go he may need a push from the international community. Particularly important is the effort to build up the Syrian opposition: uniting it and training its militias so they can be more effective in battle. At the same time, the opposition must be pushed to avoid religious sectarianism at all costs. Not only will this make the Alawites and other minorities fight all the harder, but it will also make Syria more difficult to govern should Assad fall. In Libya, one of the less dramatic but more important steps Western powers took was to build up the Libyan opposition and make it a more representative and effective institution.

But intervention must also be on the table to signal that the regime cannot put down the opposition by force -- U.S. and allied rhetoric should warn that this option will grow more likely if Assad doesn't step down. Ratcheting up the pressure today will help convince Assad loyalists that the regime cannot weather the storm and that they need to abandon ship now -- rather than do so when the opposition is more bloodthirsty and less in the mood to bargain. Only this forceful effort will end the rule of the leader who has been walking his people into a nightmare. Any less will see the bloodshed continue indefinitely, possibly sucking in neighboring states like Turkey and Israel, disrupting Iraq's fragile state-building efforts, raising tension further between Iran and the West, and giving autocrats elsewhere in the Arab world credibility when they claim that the alternative to tyranny is not freedom but chaos.